GARY KAPANOWSKI: Blue Ocean Strategy

This is an aspect I use constantly in my Lean Six Sigma projects to utilize all aspects of the organization to realize unused potential. The basic premise for Blue Ocean is to complete where others are not present and in high gross margin environments. Simple idea – hard to implement.

There are several basic building blocks needed for this strategy to generate the results you are expecting:

It’s not about technology innovation

You don’t have to venture into distant waters to create blue oceans

Never use the competition as a benchmark

Reduce your costs while also offering customers more value

Incumbents often create blue oceans—and usually within their core businesses

Company and industry are the wrong units of analysis – it’s a strategic move

Creating blue oceans builds brands

The Simultaneous Pursuit of Differentiation and Low Cost

This strategy is not being applied in today’s business. In a study of 108 companies, 86% of the new offerings were product line extensions. Thus, only 14% were approaching the concept of Blue Ocean. The line extensions accounted for 62% of the revenue but only 39% of the profits. The 14% of non-line extensions brought the companies 38% of the revenue and a shocking 61% of the profits. Thus, there is no tradeoff for profits between differentiation and low cost in a strategy. The other benefits for Blue Ocean is that there is a 10 to 15 year barrier to entry for most companies

The following blog is the opinion of Gary Kapanowski and Garykapanowski.com. It is the sole intent to broadcast this opinion from Gary Kapanowski and Garykapanowski.com exclusively and not to reflect on any other institutions or organizations associated with Gary Kapanowski or Garykapanowski.com.